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You are here: Home / Jonathon Weil Is Shrill

Jonathon Weil Is Shrill

by John Cole|  March 20, 20095:41 pm| 70 Comments

This post is in: Clown Shoes

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This is pretty rich:

The banks demanded that the accountants give them leeway in how they report losses to investors. The accountants responded by giving away their souls.

This week, the Financial Accounting Standards Board unveiled what may be the dumbest, most bankrupt proposal in its 36-year history. If it stands, the FASB ought to change its name to the Fraudulent Accounting Standards Board. It’s that bad.

Here’s what the board is floating. Starting this quarter, U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks and other equities, too.

All a company would need to do is say it doesn’t intend to sell them and that it probably won’t have to. In most cases, it wouldn’t matter how much the value was down, or for how long. In effect, a company would have to admit being on its deathbed before the rules would force it to take hits to earnings.

So, if these rules had been in place last year, a company that still owned shares of American International Group Inc. or Fannie Mae, for instance, could exclude those stocks’ price declines from net income entirely. It would make no difference that the companies were seized by the government last year, or that both are penny stocks. The loss would get buried away from the income statement, in a balance-sheet line called “accumulated other comprehensive income.”

Basically what they are asking, if I understand this correctly, is that the next time something like this happens, the accountants and banks will just pretend the losses aren’t losses. I can’t believe we didn’t think of this before. Other than the late stages of cancer, Patrick Swayze is fine! This is magical thinking taken to an art form.

More analysis here, but what shocks me is that this is what they think is the way forward. Not serious regulation and back to sane business models and practices. What we need now is new and improved hocus pocus!

*** Update ***

J. Michael Neil in the comments says otherwise.

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Previous Post: « Heads and Goldman Wins, Tails and You’re Royally Screwed
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Reader Interactions

70Comments

  1. 1.

    Comrade Stuck

    March 20, 2009 at 5:46 pm

    Out of sight out of debt.

    What we need now is new and improved hocus pocus!

    The Eric Cantor method.

  2. 2.

    Joshua Norton

    March 20, 2009 at 5:49 pm

    The loss would get buried away from the income statement, in a balance-sheet line called “accumulated other comprehensive income.”

    Yes. What could possibly go wrong with that?

  3. 3.

    guest

    March 20, 2009 at 5:50 pm

    are republicans still insisting the market is self correcting?

  4. 4.

    Margaret

    March 20, 2009 at 5:51 pm

    How does something like that even get suggested? So it still goes on the balance sheet without being declared a loss??

  5. 5.

    Shiva

    March 20, 2009 at 5:51 pm

    The government must be able to provide credible assurance that there will be oversight so that this kind of financial meltdown doesn’t happen again. If the government can’t get its act together, we may really be in trouble. I appreciate all the efforts Obama is making, but reading this post about the FASB is pretty scary. And we still don’t know when the current economic free-fall will stop.

  6. 6.

    Johnny Pez

    March 20, 2009 at 5:52 pm

    Which is not to say that the FASB won’t do it.

  7. 7.

    John PM

    March 20, 2009 at 5:52 pm

    OT, but Dayton just beat West Virginia. I am sad for Mr. Cole, but happy for my NCAA Pool.

    Back on topic: Funny how most of the accounting standards for publically traded companies try to hide as much information as possible from the public.

  8. 8.

    Brachiator

    March 20, 2009 at 5:56 pm

    Basically what they are asking, if I understand this correctly, is that the next time something like this happens, the accountants and banks will just pretend the losses aren’t losses.

    Yeah, this is bad, but I’m not sure it is an absolute disaster. The losses would not be recognized, i.e., shown on a tax return until the stocks were actually sold. However, the loss of value impacts the corporation’s ability to fund future operations, research, etc. It would be more difficult for an investor to determine how healthy a company was, but the information would still be available.

  9. 9.

    Tax Analyst

    March 20, 2009 at 5:56 pm

    Yeah, I saw an article about this, too. It’s hard to believe anybody could even float this idea with a straight face. This proposal is just a new, better and faster way to cook those books and get rid of those nasty, old fat losses that unattractively bloat your corporate bottom-line in all the wrong places. Consider this "new and improved" asset reporting method to be "microwaving the books". Its much more convenient and faster and will allow you to defraud your investors discretely with a few simple keystrokes – no face-to-face lying or conning necessary, and if its "FASB Approved", why then it’s perfectly good for you – just like the "FDA approved" downed-cow burger patties you just threw on the grill.

    You might think at some point some semblance of sanity will return. You might be wrong.

  10. 10.

    TheHatOnMyCat

    March 20, 2009 at 6:01 pm

    Clearly, John, you have not studied at the Pangloss Institute of American Contemporary History.

    Had you done so, you would realize that you live in the best of all possible worlds, and that we are just a nation of whiners.

  11. 11.

    Pender

    March 20, 2009 at 6:01 pm

    Well, I think the reasoning (which I’m not trying to defend so much as explain) is that preexisting contracts determine margin obligations based in part on balance sheets. So if you’ve borrowed money and invested in an illiquid asset or long-term project, there might be a clause that says you have to start posting collateral or even repaying early if your firm starts to look financially shaky according to your balance sheets. In this economic mess, the firm’s other assets decline in value, which forces the firm to mark down their value (mark them to market), which forces it to admit that its balance sheet isn’t looking so hot. In turn, that triggers the collateral-posting or accelerated-repayment clauses of this other unrelated debt contract, which means the firm has to sell off a bunch of illiquid assets to meet the obligation of that clause.

    That has two effects. One, it’s bad for everyone when you’re forced to sell illiquid assets. There’s dead weight loss. The asset is worth less in someone else’s hands than it was worth in yours, so the overall economic pie shrinks.

    Two, it depresses the price for that illiquid asset. Let’s say that asset is a CDO. Now, because there is one more CDO looking for a buyer, the market rate of CDO’s declines slightly. And guess what? That means that other firms have to mark the value of THEIR CDO’s to market, which means THEIR debt contract acceleration or collateral clauses are triggered, which means they have to sell off CDO’s of their own. Welcome to the liquidity trap.

    So what this accounting rule attempts to do is to break that vicious cycle by relieving firms of the requirement to mark down their assets and accelerate their repayment.

  12. 12.

    guest

    March 20, 2009 at 6:02 pm

    the fundamentals of the economy are….what?

  13. 13.

    AhabTRuler

    March 20, 2009 at 6:05 pm

    @guest: Yeah, well, noone* else has a fucking clue, either. Also.

    *included only because any use of the word ‘noone’ reminds of this poem.

  14. 14.

    D-Chance.

    March 20, 2009 at 6:10 pm

    Speaking of Patrick Swayze and deathbed watches… why no NCAA tournament open thread today, especially with WVU participati… oh, wait, they’re no longer participating.

  15. 15.

    Ian

    March 20, 2009 at 6:18 pm

    This doesn’t quite make sense. If it’s included in "Accumulated other comprehensive income", that reduces the liability/equity side of the balance sheet. The assets will also have to be shown at a reduced value, otherwise the balance sheet won’t….balance.

    I’m assuming the the losses are just being run through "Other comprehensive income" rather than "Net income", in which case it will be shown on the income statement, it will just be shown below Net Income and above OCI – separating it from income/loss that has actually been realized, or is due to continuing operations.

    I don’t think this is quite as bad as it sounds.

  16. 16.

    JL

    March 20, 2009 at 6:19 pm

    Sounds just like mortgage brokers touting low interest loans on the premise that you will be making twice as much next year and your house will be worth twice as much. Geez, I’m glad that we have an adult in the White House.

  17. 17.

    guest

    March 20, 2009 at 6:19 pm

    this is just an extension of what they’re already doing. from david cay johnston, author of "free lunch":

    Quit Cooking the Books
    By law, companies must keep two sets of books, one for shareholders, the other for the IRS. As a result, many corporations routinely tell investors they incur millions in corporate income taxes, while the financial records they give the IRS show they owe nothing or are due refunds. They do this by using tax shelters, offsetting income with losses from years ago, and employing countless other devices that make them look like paupers to the IRS but money machines to investors.

    It’s time to require companies to use the same accounting rules across the board—and then demand immediate payment of unpaid taxes. This would align the interests of investors with those of taxpayers while eliminating the obvious moral hazard of keeping two sets of books.

  18. 18.

    John Cole

    March 20, 2009 at 6:19 pm

    @D-Chance.: They were out-hustled, out-coached, shot like a school for the blind, and were on the receiving end of some seriously bad calls (the Ruoff foul that fouled him out was but an example of the kind of nonexistent bs that got called on them, while they ignored full-fledged muggings of WVU when they had the ball).

    That having been said, they were still out-hustled and outplayed.

  19. 19.

    NutellaonToast

    March 20, 2009 at 6:19 pm

    Hey, they got to spend the money they didn’t actually make when they randomly decided everyone was rich, why should they have to suffer now that they’re losing money they never actually had?

    Frankly, I don’t understand why the government doesn’t just start giving all this money away to random people. It’s become clear that none of these "financial markets" are based on any kind of reality. If it’s going to be arbitrary, might as well make it random, too. That seems only fair.

  20. 20.

    Martin

    March 20, 2009 at 6:23 pm

    Basically what they are asking, if I understand this correctly, is that the next time something like this happens, the accountants and banks will just pretend the losses aren’t losses. I can’t believe we didn’t think of this before.

    We did. That’s how Enron and previous disasters happened.

    Personally, I think there is some room for mark-to-model, specifically for mortgages where the market value for the mortgage can be effectively zero if there is no money flow, but where the borrower is in good standing and making payments. It’s entirely possible to get in a situation where the next month’s mortgage payment is worth more than the mortgage, but in a mark-to-market situation, you’d have to write down the entire mortgage. Now, the model should be external – have Freddie/Fannie price the model, but I don’t see why it wouldn’t be equally valid.

    As it stands, the only accepted measure of the value of mortgage is how much you can sell it for, not how much it will deliver on its own. In a credit freeze, that forces banks to mark down assets that do have a real, recurring value to zero, simply because nobody else has the capital to buy it.

    Even market pricing breaks now and then, but the FASB proposal is absurd.

  21. 21.

    MikeJ

    March 20, 2009 at 6:24 pm

    They were out-hustled, out-coached, shot like a school for the blind,

    Alert Jake Tapper! Cole gaff!

    Arguing with Jake Tapper is like being in the special olympics. Even when you win, you’re still retarded.

  22. 22.

    guest

    March 20, 2009 at 6:27 pm

    another graf from earlier:

    Executives are sure to complain that such a retroactive change is unfair. But recall that in 2006, when Congress voted to raise taxes on the interest from teenagers’ college funds, Sen. Charles Grassley (R-Iowa) said it is proper to end abusive practices retroactively. Perhaps now’s the time to prove it; the treasury could use a few hundred billion dollars.

    first, there were a lot of "you can’t do that retroactively" arguments coming from republicans about the bonus tax, yet here’s grassley arguing to be retractive here. second, they raised taxes on college funds?! doesn’t this violate bush’s pledge not to raise taxes. yet another bush lie has been laid bare.

  23. 23.

    TenguPhule

    March 20, 2009 at 6:30 pm

    Christ on A Crutch, if FASB passes this shit, Accounting will join the lawyers, bankers, politicans and used car salesmen as the most hated profession on Earth.

  24. 24.

    JasonF

    March 20, 2009 at 6:31 pm

    Isn’t this just version 2.0 of the complaints we heard about the Mark to Market rules?

  25. 25.

    Xenos

    March 20, 2009 at 6:34 pm

    I once played basketball at the Perkins School for the Blind. Those kids were pretty good. Sure, they had a buzzer on the net to aim at, but I could hardly stay upright with the blindfold on, much less remember where I was on the court, much less figure out how to shoot at a buzzing sound.

  26. 26.

    jonas

    March 20, 2009 at 6:34 pm

    Wouldn’t it be awesome if we poor regular schlubs were allowed to account for our own finances like this? I’ll let the big corporations do this as long as I get to walk into a bank and apply for a loan, but don’t have to tell them I’m unemployed, because I’ve moved that designation to a line on my application called "unrealized current employment" and put down the income I would be making if I were working. After all, isn’t that just fair?

  27. 27.

    AhabTRuler

    March 20, 2009 at 6:34 pm

    @D-Chance.:
    @John Cole:

    Get a Room! Er, thread! Yeah, Get a thread you kids.

  28. 28.

    John Cole

    March 20, 2009 at 6:39 pm

    Wouldn’t it be awesome if we poor regular schlubs were allowed to account for our own finances like this? I’ll let the big corporations do this as long as I get to walk into a bank and apply for a loan, but don’t have to tell them I’m unemployed, because I’ve moved that designation to a line on my application called “unrealized current employment” and put down the income I would be making if I were working. After all, isn’t that just fair?

    I know you are trying to be funny and sarcastic, but we ALREADY DID THIS. Go google “liar loan.”

    This is in part how we got here. Then, the rocket scientists asking for this newest rule change put a bunch of these liar loans and other pieces of shit all together into one big package, the shitheels at Moodys slapped AAA rating on it, then they sold all the tranches then made shitloads insuring each other on those bad loans.

    I’m sure I missed a step or two or garbled something, but that is the gist of it.

  29. 29.

    TenguPhule

    March 20, 2009 at 6:42 pm

    I’m sure I missed a step or two or garbled something, but that is the gist of it.

    Remarkably apt.

    Which of course now makes you more qualified then 98% of today’s financial advisers.

  30. 30.

    AhabTRuler

    March 20, 2009 at 6:45 pm

    @TenguPhule: He’s sharper than he pretends to be. A bright one this boy is.

  31. 31.

    TJ

    March 20, 2009 at 6:47 pm

    Stupid? Probably wrong way to look at it. They’re desperate, that’s why this keeps popping up. Make-believe is all they’ve got left.

    We are so boned.

  32. 32.

    Rome Again

    March 20, 2009 at 6:53 pm

    Which of course now makes you more qualified then 98% of today’s financial advisers.

    That’s a scary thought.

  33. 33.

    Comrade Dread

    March 20, 2009 at 6:57 pm

    I’d suggest taking these accounting techniques to Vegas, but I’m pretty sure you’d end up shot there.

  34. 34.

    camchuck

    March 20, 2009 at 7:00 pm

    Whoever thought up this one deserves a giant bonus for his indespensible contributions to corporate growth. Bravo.

  35. 35.

    Rome Again

    March 20, 2009 at 7:03 pm

    OT, but, is Tweety drunk? He is slurring his speech.

  36. 36.

    TenguPhule

    March 20, 2009 at 7:14 pm

    OT, but, is Tweety drunk? He is slurring his speech.

    Sign of a Stroke?

  37. 37.

    Delia

    March 20, 2009 at 7:18 pm

    Can I start paying my bills in Monopoly money now?

  38. 38.

    Jay in Oregon

    March 20, 2009 at 7:20 pm

    Fuck this.

    I’m so done with hearing about this crap for a while. Everything I hear either makes me mad or goes way over my head.

    I’m spending my weekend delving into Naxxramas; at least I can do something about the SOBs that are trying to shank me. (Can I pretend that Kel’Thuzad has an AIG sweatshirt on?)

  39. 39.

    Comrade Stuck

    March 20, 2009 at 7:22 pm

    @TenguPhule:

    OT, but, is Tweety drunk? He is slurring his speech.

    Excessive self indulgence

  40. 40.

    Dennis-SGMM

    March 20, 2009 at 7:30 pm

    I’m buying a yacht. I’ll just tell the bank that I have a shitload of accumulated other comprehensive income.

  41. 41.

    Brachiator

    March 20, 2009 at 7:45 pm

    OT but on target, here is a link to the New Yorker review of "Lords of Finance," Heroes and Zeroes: When central bankers rescued, then ruined, the world, by John Lanchester.

    Financial market disasters are as American as apple pie. A slice:

    Liaquat Ahamed’s book stretches from the beginning of the First World War to the setting up of the Bretton Woods system to regulate the global flows of capital, at the end of the Second. At the time his story begins, Ahamed estimates that the entire global supply of gold can be stored in a two-story town house. Most of it is to be found in the vaults of the world’s central banks, doing the passive work of propping up the respective national currencies. The men in charge of the gold are the heads of those central banks, and it is they who are the central figures of Ahamed’s book.

  42. 42.

    TenguPhule

    March 20, 2009 at 7:46 pm

    I’m buying a yacht. gold plated hookerbot. I’ll just tell the bank that I have a shitload of accumulated other comprehensive income.

    Improved.

  43. 43.

    Delia

    March 20, 2009 at 8:09 pm

    Maybe this got covered in a thread I missed, but David Brooks is mourning that we’re not being greedy and zippy enough lately. He hopes we get better soon.

  44. 44.

    Laura W

    March 20, 2009 at 8:25 pm

    O/T but apparently we are never going to see an Open Thread tonight.
    Keith O is way too tan for his hideously purple Goofy Grape tie.
    I normally love his exotic, colored ties, but tonight’s just doesn’t work in so very many ways.
    I do not think I have ever hated one of his tie choices more. I am deeply disturbed by it, frankly.
    GO TROJANS!

  45. 45.

    Delia

    March 20, 2009 at 8:29 pm

    @Laura W:

    I went to UCLA. I am constitutionally obliged to to denounce and deny any "Go Trojans" claim. Consider yourself catcalled.

  46. 46.

    passerby

    March 20, 2009 at 8:33 pm

    Starting this quarter, U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks and other equities, too.

    = hokus pokus dominokus. We are so royally screwed in all of this.

  47. 47.

    Dennis-SGMM

    March 20, 2009 at 8:34 pm

    @TenguPhule:
    Maybe, but, derivatives traders have platinum plated hookerbots – with ruby nipples and a nuclear powered um, etc.

  48. 48.

    c u n d gulag

    March 20, 2009 at 8:36 pm

    Everyone in the financial world needs a little lesson. They need to spend a year working on a real farm, or in a factory.
    For NO PAY!
    Maybe a little "Arbeit Macht Frei" will make them realize what they’ve done.

    Then, release them, and explain that the next time you fuck around with other people’s money, it’ll be two years. The next time four, etc. And after that, you and Charlie Manson can be exchanging roach and body lice recipe’s in prison for life.

  49. 49.

    Laura W

    March 20, 2009 at 8:38 pm

    @Delia: I grew up in West LA. Weekends in Westwood Village was my hobby. I was a rabid USC fan through all of my (private girls high school) days.
    I wanted to go to USC in The Worst Way. My dad would not allow it, due to "the neighborhood". (Say no more?)
    There was NO WAY in heck I could attend UCLA at that point. Talk about cognitive dissonance. So I defected to UCSB.
    Nice beach!

  50. 50.

    evinfuilt

    March 20, 2009 at 8:38 pm

    That’s insane, that’s just insane… I mean we’re talking Enron leveling accounting insane idea.

  51. 51.

    passerby

    March 20, 2009 at 8:41 pm

    @Laura W:

    Goofy Grape

    I get that Laura. Ruh Roh, we’re dating ourselves.

  52. 52.

    Phoenician in a time of Romans

    March 20, 2009 at 8:44 pm

    Can I start paying my bills in Monopoly money now?

    No. But it means you can value your 5 year old computer, your ten year old car, and your 20 year old wardrobe at the prices you paid for them then, add those to your networth, and borrow on that valuation.

  53. 53.

    feebog

    March 20, 2009 at 8:45 pm

    K.O.s tie is more of a lavender than purple. And I think it goes quite well with the 3 piece gray suit thank you.

  54. 54.

    AhabTRuler

    March 20, 2009 at 8:45 pm

    we’re dating ourselves.

    You’ll go blind.

  55. 55.

    J. Michael Neal

    March 20, 2009 at 8:47 pm

    Weil is not only shrill, he’s also wrong. Given that he cites the actual FASB Emerging Issues Task Force proposal (Warning: If you aren’t an accountant, this should only be read by the sleep impaired.), I’m tempted to claim that he’s lying.

    It primarily pertains to debt instruments, though the proposal does include equities. However, in order to use it, the entity must assert two things:

    1) The impairment in value is only temporary, and
    2) Either:
    a) It intends to hold the security until maturity (obviously doesn’t apply to most equity), or
    b) It is more likely than not that the company will not need to sell it until it has recovered its value.

    Note that the distinction between temporary and other-than-temporary impairments already existed under FAS 115, which is the statement this proposal would modify. What it does is change the specific rules under which you must consider an impairment to be other-than-temporary, and allows for certain types of other-than-temporary impairments on debt instruments only to be placed in unrealized losses under other comprehensive income, and then amortized over the life of the security.

    The previous rule on when an impairment could be considered temporary says that management must assert it has both the intent and the ability to hold an impaired security for a period of time sufficient to allow for any anticipated recovery in fair value. You may notice that that’s not a huge change. This proposal really doesn’t have much effect on equity securities.

    No auditor in their right mind would sign off on a company saying that the impairment of an equity position in AIG was only temporary. You would have to take the impairment directly to net income.

    Obviously, there is some disagreement on the board. There are two members that argue that, among other things, the change should not apply to equities. I would have to read more, but I’m not sure how this really changes it that much.

    This doesn’t quite make sense. If it’s included in "Accumulated other comprehensive income", that reduces the liability/equity side of the balance sheet. The assets will also have to be shown at a reduced value, otherwise the balance sheet won’t….balance.

    I’m assuming the the losses are just being run through "Other comprehensive income" rather than "Net income", in which case it will be shown on the income statement, it will just be shown below Net Income and above OCI – separating it from income/loss that has actually been realized, or is due to continuing operations.

    This is a part of it, yes. The substantial change here, as I see it, is that a credit impairment on a debt instrument (as opposed to an impairment for something else, such as a change in interest rates) does not need to be run through the income statement immediately. Instead, you put it in a new category of unrealized loss within other comprehensive income, and then amortize it over the life of the security. Basically, it means that, as your counter-parties go bust, you don’t have to recognize the loss as quickly.

    I suppose that there is some loosening of the rules under which you could consider the impairment of an equity to be temporary. It probably will lead to some of them being carried at cost rather than market price, but there has to be a certain level of plausibility to the claim. I’m not crazy about it, but it’s hardly the apocalypse Weil is claiming.

    Really, there is a very difficult problem here. Strict mark-to-market rules do have two problems, one general and one specific to the current crisis. The general one is that they are very pro-cyclical. When things are going well, you mark things up, the regulatory capital of financial institutions goes up, and they can leverage more. The current problem is that, when markets lock up, market prices really can be unreliable, and companies shouldn’t be forced to carry securities at those values. It does, of course, mean that it’s very difficult to figure out what value they should be carried at.

    The one thing I would say is that mark-to-market needs to be restricted in both directions. I’m okay with loosening it on the way down, so long as companies can’t apply it liberally on the way up. It needs to go both ways. However, it doesn’t surprise me that there isn’t much discussion of this. The FASB is really only making temporary patches right now. They have some major revisions coming at some point, once they can agree with what they are. Among other things, they are working on the huge project of reconciling GAAP with IFRS (the international accounting standards) so that the whole world uses the same accounting. I’m not holding my breath on them finishing this, but it is a reasonable reason to not devote too much time to making changes that are just going to get changed again soon.

  56. 56.

    AhabTRuler

    March 20, 2009 at 8:52 pm

    @J. Michael Neal: wtl;dr
    Thx 4 teh warning.

  57. 57.

    JL

    March 20, 2009 at 8:55 pm

    @Laura W: Keith looks like a crocus that arises at the first sign of spring but that is okay as long as he takes personal responsibility for the sunburn that he obviously has. (probably got watching baseball in FL). Boehner should also take personal responsibility for his fake tan and the dangers of skin cancer for tanning beds. I expect a speech about skin cancer and tanning beds and personal responsibility any moment. (don’t you)
    Are you on Sullivan’s Island yet?

  58. 58.

    Delia

    March 20, 2009 at 8:59 pm

    @Laura W:

    Well, to be honest, most sports bore me. I did grad school at UCLA, not undergrad. I went to the beach at UCSB one time in the late seventies with my then-husband and my little sister. It was during some oil spill and we got tar all over our feet. Then my sister got bitten by a spider and we had to take her to an emergency room. Other than that it was a nice day.

    PS: At least the USC neighborhood has all those cool museums.

  59. 59.

    Laura W

    March 20, 2009 at 9:05 pm

    @JL:

    Are you on Sullivan’s Island yet?

    Back from since Wed afternoon. Way too much time in the car for a 48-hr-trip. Way too little sleep. Way too much fabulous wine and two of the best meals I’ve had in a year. (Tues night: crab cakes 3" high…perfectly cooked fresh asparagus, and THE BEST risotto I’ve had since leaving Napa in 1991.)

    I had 45 min on the beach with the dog in between it all. Gave up on stalking the Sanford mansion pretty quickly. I did get the island gossip about said mansion very late Tues night Wed morn when talking to my host, but for the life of me, I can’t recall the sordid tale. We were both a tad tipsy.

  60. 60.

    Laura W

    March 20, 2009 at 9:16 pm

    @Delia:

    I went to the beach at UCSB one time in the late seventies … It was during some oil spill and we got tar all over our feet. Then my sister best friend got bitten by a spider magnum of Blue Nun and we had to take her to an emergency room.

    You’ve pretty much described my four years there.

    PS: At least the USC neighborhood has all those cool museums.

    Well, sure…but a lot of blacks, too.
    I shall never forget, as long as I live, coming home from a free Della Reese concert in Palms Park (literally right "over the fence" from the street I lived on) with a bumper sticker that read: "Good Neighbors Come In All Colors". My father was so incensed that he ripped it up.
    My dad was a West LA realtor. He didn’t have much fondness for the blacks and the Jews. Or any group of "Others", frankly.
    Although my mom always suspected he was slightly "gay". But I know that he was a good Republican and that is preposterous.
    ;-)

  61. 61.

    JL

    March 20, 2009 at 9:26 pm

    @Laura W:

    crab cakes 3" high

    I’m drooling as you write.. I grew up in New England with the most delicious shell fish, think lobsters, that were on a weekly menu. A decade back, I became to have adverse to reactions to it. (Swelling and hives, think Homer Simpson’s lips) Although I did not have problems with breathing, I have stayed away from shellfish. The last problem that I had was while I was working and turned into part Homer and part raccoon. My eyes had white lines underneath while my lips swelled up larger than Jolie’s but not as attractive. It was caused by the calcium that I was taking with Oyster shells. No shrimp, no oysters, no crabs, no lobsters, no clams, no scallops… yuk.

  62. 62.

    AhabTRuler

    March 20, 2009 at 9:45 pm

    No shrimp, no oysters, no crabs, no lobsters, no clams, no scallops… yuk.

    I’d rather die.

  63. 63.

    zirconium

    March 20, 2009 at 9:49 pm

    I’m drooling as you write.. I grew up in New England with the most delicious shell fish, think lobsters, that were on a weekly menu.

    Ummm, it’s almost clamcake season here in southern NE. My favorite clamshack, the one that serves the best deep fried clamcakes, is on my way home from the beach. Comfort food. I’ll take a dozen, anytime. Delicious, succulent clamcakes, the unofficial state food. I’m drooling all over my keyboard just thinking about.

  64. 64.

    JL

    March 20, 2009 at 9:51 pm

    @AhabTRuler: yeah but double and triple doses of benadryl no longer worked. I do think that I can try again since I live close to a hospital. Of course, my doc thinks that I’m crazy but crazy is okay.

  65. 65.

    Lesley

    March 20, 2009 at 11:46 pm

    Brad over at SadlyNo covered this on March 17.

  66. 66.

    joeyess

    March 21, 2009 at 1:01 am

    You all want shrill? I’ll give ya shrill.

    This is shrill\

    Enjoy.

  67. 67.

    Studly Pantload, Would Be Minion of John Cole

    March 21, 2009 at 6:59 am

    I approve of Olbmerann’s move toward three-piece suits. The lavender tie, however, just did not go with the orange skin — and in fact I’m not a fan, overall, of his choices in tie colors. But what really drives me to (albeit, mild) distraction is his penchant for plaid-striped shirts. To me, a plaid-striped shirt with tie just screams "farm equipment salesman." (Not that being a farm-equipment salesman isn’t a noble profession, mind you…)

  68. 68.

    Karmakin

    March 21, 2009 at 8:50 am

    @J. Michael Neal: Very interesting.

    It’s pretty clear, at least to me that this new rule would prevent the sort of cataclysmic chain reaction (or at least help prevent) that we’re on the verge on right here.

    I’m very cynical of most of the modern financial system, and I have been before it’s been popular. So that’s why I look at it in a different light. All this stuff is basically smoke and lights and kabuki and has been for me as long as I’ve been watching it. So with the assumption that the smoke and lights and kabuki are going to be there, I don’t see a problem with a little bit more to get a little bit more stability.

  69. 69.

    sal

    March 21, 2009 at 10:39 am

    J. Michael Neal

    Really, there is a very difficult problem here. Strict mark-to-market rules do have two problems, …The current problem is that, when markets lock up, market prices really can be unreliable, and companies shouldn’t be forced to carry securities at those values. It does, of course, mean that it’s very difficult to figure out what value they should be carried at.

    I’ve never figured out why economists/accountants/pundits/whoever say mark to market valuation is problematic. Call me naive, but isn’t a core principle of capitalism that something is only worth what someone will pay for it? The idea that something is really worth more than someone will pay for it because hey, in the future someone may pay more for it doesn’t seem to jibe with this principle. If my house is worth $200K, based on what someone will pay me for it today, can I claim it’s worth $500K because who knows, I think someone a few years down the road will pay that for it? So my buyer should pay $500K today, or my insurance company should pay it if the house burns down. Maybe taxpayers should make up the $300K difference.
    Not using mark to market valuation seems like the value is based on wishes, hopes and dreams. Bets, essentially, even if based on some arcane accounting tautologies.
    Mark to market may induce more volatility than some want, but it seems more accurate of true worth at any particular point in time. If a stock is trading at $10 on Monday, I can’t sell it for $15 because I claim that’s what it’ll be worth on Tuesday.

  70. 70.

    glasnost

    March 21, 2009 at 2:49 pm

    Give me a break. J Neil, you spend 1000 words writing all that garbage, and you weren’t able to bring yourself to say "this doesn’t apply to equities". That means, in practice the point is to let you lie about your stock values. Corporation A can be holding 500,000 shares of Corporation B, which has just had all its building burnt to the ground and its licenses pulled, and can pretend for as long as it feels like that it could actually use those shares to buy something else or pay some kind of debt it owes, as long as it promises not to actually try to do it anytime soon ("until the value recovers").

    It’s just an open license to leverage yourself even more highly; in fact it’s a license to keep making yourself MORE leveraged even while the dominoes are falling all around you. Not only that, but since you promise not to sell any of this crap early, when it begins to fall in value, in exchange for promising to hold onto it forever, when the systemic crisis DOES hit and you have no CHOICE but to sell EVERYTHING, instead of only being able to meet 15% of your obligations, it’ll be more like 2%.

    I’m no finance wizard – I can’t figure out the Geithner plan no matter how hard I try. But suspending mark-to-market is just plain horses*it. The idea that a lack of liquidity, or fear, or whatever is pushing values below what they’re "supposed to be" is just lunacy. Prices are psychological. They’re made up. There is no supposed to be. There is no inherent value. What mark-to-market really is, is a price control, a price floor. Like the ones those economists shriek about because of the distortions they cause. There’s too much distortion here already, thanks.

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